New Law Changes, on Tuesday 3rd August, the Treasury Laws Amendment (Covid-19 Economic Response No. 2) Bill 2021 was introduced into Australian Parliament, thus confirming Scott Morrison’s recent comments that covid-19 disaster payments will now officially be tax-free.
Under the new changes, all covid-19 disaster payments dating back to its introduction on 3rd June 2021 will now be non-assessable non-exempt income, meaning recipients will take home more than they did under the $90 billion JobKeeper wage subsidy program, which was taxed.
Australian workers who lose 20 or more hours of work a week will receive $750 a week, while workers who lose between eight and 20 hours will receive $450.
Up until the Prime Minister’s comments on Thursday 29th July, official guidance from the Treasury, the Tax Office and Services Australia all stated that covid-19 disaster payments were taxable income.
However, it still remains unclear how Victorian workers who received the disaster payments in June and have gone about lodging their 2019–20 tax returns will be treated by the ATO (Australian Tax Office).
The ATO updated its guidance on Tuesday 3rd August to reflect the potential law change, with further guidance to come once legislation passes both houses.
Michael Croker, tax leader at Chartered Accountants Australia and New Zealand, said he was hoping for a smooth administration of the law change.
“Hopefully the ATO will auto-correct 2021 individual tax returns already lodged which treated the COVID-19 disaster payment as assessable,” said Michael Croker, tax leader at Chartered Accountants Australia and New Zealand.
“NANE treatment will no doubt be welcomed by recipients of COVID disaster payments and state business support, but adds another, unquantifiable ‘tax expenditure’ eroding the federal government’s budget bottom line,” continued Michael Croker.
Close to $500 million in disaster payments have so far been paid to almost one million workers across New South Wales and Victoria.
New Law Changes, Tax-Free Business Covid-19 Support Payments
The new legislation will also make sure that Covid-19 business support payments will be treated as non-assessable non-exempt income.
Business support payments will furthermore only be tax-free if they are made under a program declared eligible by Treasurer Josh Frydenberg and were received in the 2021–22 financial year.
NSW’s business support grant, micro-business support grant, and its JobSaver program are expected to be eligible following a joint announcement by Mr Morrison and Mr Frydenberg on Tuesday 13th July 2021.
It is important to note that, businesses must have an aggregated turnover of less than $50 million to be eligible for the concessional tax treatment, putting it at odds with NSW’s JobSaver program which was recently expanded to businesses with an annual turnover of up to $250 million.
“Life doesn’t get easier for accountants, who now face the challenge of identifying expenditure rendered non-deductible to the extent it relates to the production of NANE (although losses are not eroded by NANE),” said Michael Croker, tax leader at Chartered Accountants Australia and New Zealand.
“CA ANZ expects consultations to occur with the ATO on this issue.”
The new bill will also enable data from the ATO to be shared with the relevant states and territories administering COVID-19 business support programs.
The information will be used to establish eligibility for support payments and will also be used to facilitate compliance activities. Mr Croker expects BAS and Single Touch Payroll information to now be shared readily between the ATO and relevant government agencies.
New Law Changes, 2021 Covid-19 Business Support Grants Announced For Lockdown Impacted Business In Queensland
If your business has recently been impacted by the latest Queensland based covid-19 lockdown, you might be eligible to receive financial support via the 2021 Covid-19 Business Support Grants.
These grants worth $5,000 will be available for small and medium businesses located across Queensland who have been impacted by the lockdown which commenced on Saturday 31st July 2021.
The Queensland Government recognises the short interval between lockdowns in South East Queensland, and the difficulties faced by regional economies who are impacted by multiple border closures. These $5,000 grants will provide cash flow support for businesses to help them adapt as the current covid-19 outbreak continues to pose a risk of circulating in the community.
Your business may be eligible to receive a grant of $5,000 (excluding GST). This grant may be used for business expenses.
New Law Changes, Eligibility Criteria
The grant provides support to employing small and medium businesses across Queensland impacted by the South East Queensland lockdown that commenced on Saturday 31st July 2021.
To be deemed eligible your business doesn’t have to be located in South East Queensland, but you must have experienced at least a 30 percent reduction in turnover as a result of the lockdown.
Grants are also available for large businesses in the hospitality and tourism sector operating in the 11 local government areas in the lockdown, subject to meeting eligibility criteria.
Small and medium businesses are defined as having:
- a turnover of more than $75,000 per annum
- an annual payroll in Queensland of up to $10 million.
Local government areas subject to lockdown restrictions are:
- Brisbane City Council
- Gold Coast City Council
- Ipswich City Council
- Lockyer Valley Regional Council
- Logan City Council
- Moreton Bay Regional Council
- Noosa Shire Council
- Redland City Council
- Scenic Rim Regional Council
- Somerset Regional Council
- Sunshine Coast Regional Council.